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DECISION No

DECISION No. 53/2001/QD-NHNN OF JANUARY 17, 2001 PROMULGATING THE REGULATION ON BIDDING FOR TREASURY BILLS AT THE STATE BANK

THE STATE BANK GOVERNOR

Pursuant to Vietnam State Bank Law No. 01/1997/QH10 and Credit Institutions Law No. 02/1997/QH10 of December 12, 1997;

Pursuant to the Government�s Decree No. 15/CP of March 2, 1993 on the tasks, powers and State management responsibilities of the ministries and ministerial-level agencies;

Pursuant to the Government�s Decree No. 01/2000/ND-CP of January 13, 2000 promulgating the Regulation on the issuance of Government bonds;

After reaching agreement with the Finance Ministry and considering the proposal of the director of the Credit Department,

DECIDES:

Article 1.- To issue together with this Decision the Regulation on bidding for treasury bills at the State Bank.

Article 2.- This Decision takes effect 15 days after its signing and replaces the State Bank Governor�s Decision No. 61/QD-NH19 of March 8, 1995 promulgating the Regulation on organization of bidding for treasury bills.

Article 3.- The director of the Office, the director of the Credit Department and the director of the Transaction Bureau of the State Bank, the heads of the relevant units attached to the State Bank, the directors of the State Bank�s branches in the provinces and centrally-run cities, the chairmen of the Managing Boards and the general directors (directors) of the members participating in biddings for treasury bills shall have to implement this Decision.

For the State Bank Governor

Deputy Governor
NGUYEN VAN GIAU

REGULATION ON BIDDING FOR TREASURY BILLS AT THE STATE BANK

(Issued together with the State Bank Governor�s Decision No. 53/2001/QD-NHNN of January 17, 2001)

Chapter I

GENERAL PROVISIONS

Article 1.- Scope of regulation

This Regulation provides for bidding for treasury bills at the State Bank.

Article 2.- Bidding for treasury bills at the State Bank means the State Bank acts as the agent for the Finance Ministry in issuing treasury bills by mode of wholesale through bidding among members on the primary market.

Article 3.- Bidding principles

1. Publicity and equality in terms of interests and obligations among members participating in biddings.

2. Confidentiality of all information on bid offers of the members as well as the guiding interest rate (if any) of the Finance Ministry.

Article 4.- Forms of selling treasury bills

1. Par-value equivalence: The bills shall be sold equally to their par value; the principals and interests shall be paid in lump-sum upon the bills� maturity.

2. Discount: The bills shall be sold at a price lower than their par value and shall be paid for according to their par value upon their maturity.

Article 5.- Subjects eligible for participation in bidding for treasury bills

1. Banks operating in Vietnam, including commercial banks, development banks, investment banks, policy banks, cooperation banks, joint-venture banks, branches of foreign banks and banks of other types operating under the Credit Institutions Law.

2. Financial companies, insurance companies, insurance funds and investment funds operating in Vietnam.

Chapter II

SPECIFIC PROVISIONS

Article 6.- Conditions for participation in treasury bill-bidding market at the State Bank

Subjects considered to be recognized as members of treasury bill-bidding market at the State Bank must fully satisfy the following conditions:

1. Having legal person status and being established under current Vietnamese law;

2. Having legal capital of VND 20 billion or more;

3. Having Vietnam dong accounts at the Transaction Bureau or designated branches of the State Bank (in cases where subjects applying for participation are credit institutions, financial companies or deposit insurance) or at a credit institution being member of the treasury bill- bidding market (for other subjects).

4. Filing applications for participation in the treasury bill- bidding market at the State Bank and registering lists of persons authorized to sign documents related thereto.

Article 7.- Recognition of the membership to treasury bill-bidding market

1. The State Bank shall issue certificates of membership to treasury bill- bidding market for those subjects that fully meet the conditions prescribed in Article 6 of this Regulation.

2. The State Bank shall consider the withdrawal of certificates of membership to treasury bill-bidding market from those members that fail to meet the prescribed conditions.

Article 8.- Bidding notice

1. Two (2) working days before organizing a bidding, at the Finance Ministry�s request for the issuance of treasury bills, the State Bank shall send notices on the issuance of treasury bills to members of the treasury bill- bidding market and announce such on the mass media.

2. The State Bank (Transaction Bureau) shall send notices on the issuance of treasury bills in the following forms:

a/ Through the computer system, if the members are connected with the State Bank by a computer network.

b/ By fax, to the members and designated branches of the State Bank.

3. To post up notices at the Hanoi-based Transaction Bureau and designated branches of Vietnam State Bank and announce such on the mass media.

4. Where the members fail to participate in bidding for 5 consecutive sessions, the State Bank shall stop to directly notify them by fax of the subsequent bidding sessions. The direct notification shall resume when such members continue to participate in bidding.

5. The contents of the State Bank�s notices on the issuance of treasury bills shall comply with the set form.

Article 9.- Bidding registration

1. The bidding registration by the members shall be made according to the set form. The members shall send bidding registration cards between 08.00 and 12.00 hrs on the bidding date.

2. The contents of the members� bidding registration cards shall uniformly comply with the following:

a/ The interest rate shall be inscribed in percentages per annum (%/year) and rounded up to 2 figures following the decimal point;

b/ Each card may be registered with 5 different interest rates at most. The registered volume at each interest rate must be the multiple of VND 100 million.

c/ The registered volume at each interest rate and the total volume must be inscribed in letters and numbers. In case of a disparity between the volume in numbers and that in letters, the registered bidding volume at the concerned interest rate shall be invalid and precluded from the registration card.

d/ The bidding registration card (original) must be signed by the concerned member�s representative at law, who has registered his/her signature at the State Bank, put into an envelope and sealed. Where the registration card is transmitted via the computer network to the State Bank, its confidentiality must be ensured according to the State Bank�s regulations.

3. The registration cards of the market members without accounts at the State Bank must clearly state the account numbers and the names of the banks (also members of the market), where such members open their accounts.

Article 10.- Deposit

1. Members participating in bidding must pay deposit at the State Bank (its Transaction Bureau or designated branches) as a guaranty for their responsibility to participate in bidding. The deposit level shall represent at least 5% of the registered bidding value.

If the deposit of a registration card fails to reach the set level, the volume of treasury bills already registered for bidding shall be considered equal to 20 times the deposited money amount (corresponding to the minimum deposit level of 5%).

2. The State Bank shall open a separate deposit account to record money amounts deposited by members. The deposit money amounts shall not bear any interests during the time of depositing.

3. For members without accounts at the State Bank, the deposit shall be effected through a bank being the market member so that the latter may pay deposit to the State Bank.

4. The deposit money shall be deducted and remitted into the State budget in cases where the bid winners refuse to buy treasury bills or do not have enough money to buy treasury bills as prescribed.

5. The State Bank shall refund the deposit money amount to those members who fail the bidding right on the bidding date.

Article 11.- Mode of sending bidding registration cards

1. For each bidding, each participating member may send only 1 registration card for each term of treasury bills.

2. The registration cards shall be put directly into a card box at the State Bank (its Transaction Bureau or designated branches) or transmitted via the computer system to the State Bank�s Transaction Bureau according to the State Bank�s regulations on confidentiality of information.

3. The card box shall be secured by 2 padlocks, the keys of which shall be kept by 2 competent officials, each with 1 key. Where the bidding registration cards are transmitted through the computer network, their passwords shall be known only to the competent person(s) to ensure the confidentiality thereof before bid opening.

Article 12.- Bid opening

1 Bid opening shall be effected at 13.30 hrs of the bidding day to the witness of an inter-ministerial bidding board.

2. The processing division shall inspect the validity of bidding registration cards (which, after being examined, shall be signed for certification separately by two officials, then by the head of the processing division). The invalid bidding registration cards and offers (which fail to comply with the provisions at Clause 2 of Article 9 and fail to reach the deposit level prescribed in Article 10 of this Regulation) shall be precluded. The Transaction Bureau or designated branches of the State Bank shall notify those members that have their bidding registration offers or bidding registration cards precluded of the reasons therefor.

3. After precluding the invalid bidding registration cards and offers, the designated branches of the State Bank shall transmit the sum-up bidding table and the members� bidding registration cards to the State Bank�s Transaction Bureau in Hanoi (by fax or through the computer system with separate symbols and codes) for the concentrated bid consideration at Vietnam State Bank.

Article 13.- Bid consideration

1. Principles of bid consideration: The bid-winning volume of treasury bills shall be considered in according to the offered interest rates from low to high.

a/ Where a guiding interest rate is available: The bid-winning interest rate shall be the highest interest rate registered for bidding within the ambit of the guiding interest rate, at which the bid-winning volume of treasury bills does not exceed the to be-issued volume.

b/ Where a guiding interest rate is unavailable: The bid-winning interest rate shall be the highest interest rate registered for bidding, at which the bid-winning volume of treasury bills does not exceed the to be-issued volume.

2. In cases where at the bid-winning interest rate, the total volume registered for bidding exceeds the to be-issued volume, the volume of treasury bills at the bid-winning interest rate shall be distributed proportionately to the registered bid offers at such interest rate, ensuring that the bid-winning volume of treasury bills shall not exceed the to be-issued volume.

3. The bid-winning interest rate shall apply to all bid-winning treasury bills for calculation of their selling price.

4. The bidding results must be signed for certification by the competent representatives of the Finance Ministry and the State Bank at the treasury bill- bidding board.

Article 14.- Selling prices of treasury bills

1. For treasury bills issued in form of par-value equivalence

The selling price of such treasury bills shall be equal to 100% of their par value. The money paid for treasury bills (both principals and interests) upon their maturity shall be calculated according to the following formula:

n

T = G + (G x Ls x ------ )

365

Of which:

T: is the total money amount (principals and interests) to be paid for treasury bills upon their maturity.

G: is the selling price of treasury bills

Ls: is the bid-winning treasury bill interest rate (calculated in percentages per annum)

n: is the term of treasury bills (calculated in days)

2. For treasury bills issued in form of discount

The selling price of treasury bills shall be lower than their par value (minus the interest rate the members are entitled to during the time of purchase of treasury bills) and when the bills come due, the members shall be paid according to the par value of treasury bills at the time of their issuance. The selling price of treasury bills shall be calculated according to the following formula:

MG

G = -------------------------

Ls x n

1 + -----------------

365 x 1,000

Of which:

G: is the selling price of treasury bills

MG: is the par value of treasury bills

Ls: is the bid-winning interest rate of treasury bills (calculated in percentages per annum)

n: is the term of treasury bills (calculated in days)

3. The money amount that the bid-winning members must pay shall be rounded up to the unit of 100 dong.

Article 15.- Notification and reporting on bidding results

After determining the bidding results, the treasury bill-bidding board shall report the bidding results to the Finance Minister and the State Bank Governor; and at the same time, directly notify such to the bidding participants by fax or through computer system (if any) according to the set form, which shall also be posted up at the Transaction Bureau and designated branches of the State Bank and announced on the mass media.

Article 16.- Payment for the purchase and hand-over of treasury bills

1. Pursuant to the State Bank�s notice on bidding results, the bid winners shall have to fully pay money for the purchase of treasury bills to the State Bank (its Transaction Bureau or designated branches) within 2 working days as from the bidding day. At the same time, the State Bank shall credit the treasury bill account (where the treasury bills are issued in form of book-entry) or hand over the certificates of treasury bills (where treasury bills are issued in form of certificates) to the bid-winning members.

2. In cases where the State Bank does not receive money paid for treasury bills from bid- winning members when such payment is due, it shall automatically make deduction from the bid- winning members� deposit accounts (if any) at the State Bank; or request the credit institutions being members of the market that hold the bid- winning members� deposit accounts to make deduction therefrom to fully pay for treasury bills; if the bid- winning members� deposit accounts are not enough to cover the payable money amount, the State Bank shall cancel those parts of bidding results for which the payment has not been made and deduct the deposit of such members for remittance into the State Budget.

3. The State Bank shall credit the whole sum of money paid for treasury bills by bid winners to the State Treasury�s deposit account opened at the State Bank�s Transaction Bureau not later than the morning of the third working day as from the bidding day.

Article 17.- Settlement of the due treasury bills

1. One (1) day before treasury bills come due, the Finance Ministry (the Central State Treasury) shall transfer the money amount (both principals and interests) paid for treasury bills to the State Bank (Transaction Bureau). If by the payment date, the State Bank has not received the money-transfer voucher from the Central State Treasury, it shall take initiative in making deduction from the deposit account of the Central State Treasury to pay the bill owners.

2. The State Bank shall pay the treasury bill owners both principals and interests (if any) of treasury bills on the date of their maturity. Where the date of payment for the due treasury bills coincides with the weekend, festive day or Tet holiday, the bill principals and interests shall be paid on the following working day.

Article 18.- Responsibilities of the units attached to the State Bank

1. The State Bank�s Transaction Bureau:

a/ To consider the granting and withdrawal of certificates of membership for subjects participating in the treasury bill- bidding market.

b/ To comply with the direction of the treasury bill-bidding board in sending notices on the issuance of treasury bills, receiving bidding registration cards, organizing bid consideration and notifying bidding results to the participating members and designated branches of the State Bank according to the provisions of this Regulation.

c/ To announce the issuance of treasury bills and the results of bidding for treasury bills on the mass media.

d/ To make and submit reports on bidding results to the State Bank Governor and the Finance Minister as well as the Credit Department, the Monetary Policies Department and the Accountancy-Finance Department.

e/ To receive money paid for treasury bills from the bid-winning members and settle the due treasury bills for their owners. To hand over to and withdraw treasury bills from members when they win bids and when the treasury bills come due.

f/ To conduct the accountancy cost-accounting of bidding and manage the deposits for treasury bills as prescribed.

g/ On the basis of the provisions in this Regulation, the director of the State Bank�s Transaction Bureau shall issue the procedures of bidding for treasury bills.

2. The Accountancy- Finance Department:

To guide the regime of accountancy cost-accounting of bidding for treasury bills.

3. The Issuance and Storage Department:

a/ To coordinate with the Central State Treasury in organizing the printing and preservation of certificates of treasury bills according to the provisions on the printing and preservation of valuable documents.

b/ To organize the transportation, preservation and hand-over of certificates of treasury bills to the Transaction Bureau and designated branches of the State Bank.

c/ To open books for monitoring and settlement of certificates of treasury bills according to current regulations.

4. The designated branches of the State Bank

a/ To examine the eligibility of members in the localities, notify the State Bank�s Transaction Bureau of the members that fail to meet the conditions for participation in the treasury bill- bidding market so that the latter may withdraw the membership certificates from such members.

b/ To post up notices on bidding for treasury bills at their offices.

c/ To receive bidding registration cards and manage deposits of the bidding participants.

d/ To open bids and make a sum-up of bidding registration cards of the members in localities that take part in bidding (after precluding the invalid bidding cards and offers), and transmit it through the computer network to the State Bank�s Transaction Bureau for bid consideration.

Article 19.- Amendment, supplement

Any amendment and/or supplement to this Regulation shall be decided by the State Bank Governor.

For the State Bank Governor

Deputy Governor
NGUYEN VAN GIAU